AI Article Synopsis
- The paper explores how cutting subsidies for private health insurance impacts public spending on hospital care.
- It uses an econometric framework with simultaneous equation models to analyze healthcare use and private insurance decisions in Australia.
- The findings suggest that reducing premium subsidies could lead to net cost savings, as the savings from the subsidy cuts outweigh any increase in public hospital expenditures.
Article Abstract
This paper investigates the effects of reducing subsidies for private health insurance on public sector expenditure for hospital care. An econometric framework using simultaneous equation models is developed to analyse the interrelated decisions on the intensity and type of health care use and private insurance. The framework is applied to the context of the mixed public-private system in Australia. The simulation projections show that reducing premium subsidies is expected to generate net cost savings. This arises because the cost savings achieved from reducing subsidies are larger than the potential increase in public expenditure on hospital care.
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| http://dx.doi.org/10.1016/j.jhealeco.2013.11.007 | DOI Listing |
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